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Bloomberg West

News/Business. The personalities, companies and trends that are transforming the global economy.

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China 9, Us 7, Jim Delany 4, Sochi 4, Apple 4, Seattle 3, Cory Johnson 3, Emily Chang 2, Apolo Ohno 2, Steve Ballmer 2, Rick Horrow 2, Usoc 2, Lenovo 2, China Telecom 2, Michigan 2, L.a. 2, San Francisco 2, Vancouver 2, U.s. 2, California 2,
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  Bloomberg    Bloomberg West    News/Business. The personalities, companies and  
   trends that are transforming the global economy.  

    December 6, 2013
    12:00 - 1:01am EST  

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>> live from pier three in san francisco, welcome to the late edition of "bloomberg west," where we look at the technology and media companies shaping our world. i'm emily chang. let's get to the rundown. nelson mandela died at the age of 95 and tributes are pouring in around the globe.
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>> we've lost one of the most influential and courageous and good human beings. he belongs to the ages. >> mandela served 27 years in prison after being convicted of treason with the white minority government. three years later, he won the nobel peace prize. he became the first elected black president. once again, mandela has died at 95. we'll have more later in the show. meantime, our top tech story, twitter has added the first woman to their board effective immediately.
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she was ceo of pearson until last year. twitter faced controversy for not having a woman board member. she tweeted, "there could not be a more exciting time to join." john is in l.a. what is the latest? >> this was a priority to have a woman join the board. there are a number of things that made her the right candidate. she is smart and a forward thinking person. speaking with someone who worked with her, she pushed the envelope in the industry.
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the international experience and media experience is helpful for where twitter is now. there are certainly questions about twitter's business and she can help in those areas. and emily, you had that great interview on ipo day shedding light on this process. here is what he said to you on that day. >> it was very important to us not to ask someone to join the board and sign off of registration statements before spending time with the company. we didn't think it was
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respectful. we'll have women board members. we regularly talk to candidates about it. >> twitter will roll out tailored ads? >> we have seen a number of companies do it. facebook will track if someone is on a travel site, if they're a sickly what they're going to do is track when somebody is on another site, say a travel site, if that travel site is interested in targeting people when they are on twitter with a certain ad about a travel deal, they have teamed up with some at technology players that will help them do that. this is one of the ways by which facebook is able to boost its revenue.
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>> while it is unclear what the event is about, many are speculatingc1 event is about, many are speculating it could have something to do with printing. other invitations were sent in the mail on paper. others were on a block of wood with printed pictures that you could hang on the wall. thismilian, what you think is going to be? >> no, i don't think printing is going to have anything to do with it. there were a lot of people jumping online who got the invitation, speculating it might have something to do with photo printing. it strikes me as unlikely and a very good business for instagram to get into. >> there are a lot of third
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parties who do this already. what will they do if not that? >> one of the rumors we heard is maybe instagram is going to give instagram.com e-mail addresses to everybody so you can message in your photos and message with friends. that strikes me as unlikely to. facebook already gave everybody facebook.com addresses and facebook really wants to own the messaging experience to challenge -- some of the other big messaging companies overseas. the one that strikes me as a little more likely -- >> i was going to say, what sexy is likely? >> facebook and snap chat were -- i think maybe we will see something like an expiring messages exchanged.
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some sort of drive it -- >> sharing instagram's? why would they do that? the whole business is built on the library of data and photos that they are building up, right? an still collect the data, they won't necessarily retain the photos. facebook has demonstrated in the past that in addition to negotiating, they're are interested in this type of business. mark zuckerberg famously worked on a project at facebook to clone snap chat. they called it hoped and put it out. it did not do well at all. i don't think facebook is ready to give up on this. >> one of the top executives at facebook moved over to instagram just went over to snap chat to be their ceo. is that a sign that the tide is turning against instagram? yes, emily was running ads at
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instagram. she brought on one of the early advertisers and now she is moving to los angeles to move for snap -- to work for snap chat. re-ink they are seeing that created in l.a. would snap chat and they want to be a part of it. >> thank you. we will be covering that event next week in new york and we will bring you all the details as we have them. china mobile's four g license may have sealed its deal with apple. but can they convince subscribers to leave three g behind? that is next on "bloomberg west t." otte
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>> two years ago they saw 300% growth in the country, double sales last year. this year they are in single digits. their market share has only dropped to about six percent
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compared to samsung which has boosted up to 21%. people are really excited. if apple can sign the deal with china mobile, they will have access to the 759 million subscribers. here's one of the problems for apple. only 25% of china mobile's customers are using three g. most of them are still price-sensitive and using the old two g network. it is going to be difficult to million consumersconsume00 to change contracts. >> has the trend suggested that we are seeing consumers move from three g to higher end phones at the same time? >> what has happened is on the two g side, a lot of consumers prefer to buy pop-up cards were based band nine or 10 u.s. dollars in pay-as-you-go. they don't like to sign up for
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two or three year contracts. -- shanghai telecom's make it difficult. one of the key is is that in the last year, some of the other operators like china telecom have been rolling out cheap data service plans. eme consumers go to th because they're getting high and smart phones at a cheap rate. lightedow you have high that being big can sometimes be bad if you are drawing a lot of attention to the fact that you have got so many subscribers. what does the future hold for a company like china mobile? >> china mobile's market share has dropped from 70% to 65% in the last three years. the competition is getting fierce on the operator side. after the third plenum which took based three weeks ago where
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the chinese government met, there have been rumors that they want to stop the dominance of china mobile. they are almost a monopoly. you will see a potential breakup or better policies geared towards helping china telecom and china unicom to move up. that is why china mobile stock is not done so well in recent years. >> what can you tell us about the demand in china for the homegrown names? the rise of the products from players like lenovo and the challenge to that which are faced their? >> apple was the cool product everybody had to buy. 20-year-olds aspired to by apple. it was a major gifting purchase. it was talked about on the same level as rolex or cartier. hassamsung galaxy line taken over. is gaining market share.
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they opened a large test center where people can come in and play with the products. they are about 20%-30% cheaper. they're good enough and in some cases almost as good very at i was interviewing some banks last week and a lot of the banks said that they are now buying lenovo phones to give to their employees. we expect to be serious competition -- we expect to see serious competition for apple especially from the chinese handset makers. >> much appreciated, sean. nd it back to you. >> there is fresh speculation that microsoft has finally chosen a successor to ceo steve ballmer. the problem is that the guy they have chosen already has a job and people like him in that job. here is our editor at large cory johnson.
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>> it is a problem to be so well-liked as you well know. >> please, don't flatter me. >> why do they want steve ballmer replaced? stock chartt the and see what happened with microsoft over the course of ballmer's tenure. of 2000e ceo in january when the.com bubble was at its frothy is. microsoft has not done much since 2001.2001. it had a decent run since the lows of 2008. really impressive job that mulally did coming from a different industry. a different sales structure and planning structure than boeing. he really put it on solid
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footing going into the recession of 2008. those of the turnaround skills that the microsoft board really likes. >> let's take a listen to what malala he said. said.hat mulally >> it wasn't unequivocal bowl leadpipe cinch, let's hear what he said. you always said in the past that i'm going to stay at least until 2014. hange in the plans. it sounds like a nondenial denial. >> i looked at a number of things he said over the course of the last few months. he said that he loved serving fort. it does seem like he is
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walking back to the unequivocal denials. >> microsoft said they wanted to decide before the end of the year, right? >> any big decisions companies are talking about before the end of the year are probably not going to happen the week of christmas. any number of companies are going to comment in the next week or two. t> how much power does i actually have to protect its ? stomers ac ♪
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>> this is "bloomberg west," i'm emily chang. microsoft is stepping up its
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encryption to protect company -- cu customer information. how big is a challenge is this? cory johnson is in the newsroom with more. >> microsoft says it is going to make its software code more transparent so customers can see for themselves that there are no backdoors into their data. for more on how that is going to work, we was big with the vice president of research at is interesting to me that the government is in an arms race with a u.s. company. what is microsoft proposing specifically? >> they are proposing to do a few things. ultimately this will be good news for consumers because what is happening is you will get additional security. the trend over the previous years has been to increase the amount of laces where encryption
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is enabled by default. even before any of the snowden leaks happened, this was going on and was the trend. is is really a continuation of that process. today, it is always encrypted for everyone. we are seeing more service moving in that direction. >> when i think of this conceptually, i think of the big nsa data center in utah where the nsa is building a physical facility to do the kinds of computing that has never been seen before as part of this amazing wired magazine story. is that really what we are looking at? the best tech minds against the best tech company? >> something like that with a big data center, the assumption is that there's going to be an ability to crack encryption on a very large scale. that is what one of the microsoft protections is actively trying to work against.
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the idea of enabling this thing that they are calling perfect full room secrecy is going to make it difficult to encrypt traffic. with this perfect secrecy, that is no longer going to be possible. that makes the impact of cracking any key, whether it is hotmail or gmail much less impactful for the average consumer. it makes to cracking a lot more difficult to do. >> as far as big businesses that are facing this problem, i understand why anyone is concerned, it seems to me that the kind of information they want will most likely be found on facebook. >> i think the information -- it
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is the aggregation of all the information that a person uses, whether it is e-mail or facebook . yet just as many social connections in your e-mail or other interactions is on facebook. it is all that metadata put together the creates an overall picture of an individual. the one thing that is not new year is that any data that travels over the internet is subject to eavesdropping, not only by the government but by any of the private arteries. the private companies that operate that underlying into structure -- underlying infrastructure that makes up the internet. the big companies understand the risk and they probably never saw business justification to encrypt all of its information. ight not be a new problem but it is a bigger problem than ever before. thank you very much. >> thank you, cory. we will be bringing you a special bloomberg west. will be broadcasting live from
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ebay headquarters in san jose. we will have exclusive int interviews with the ceo and many others. we will go behind the scenes at ticket site stub hub and many more. ♪
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>> sportfolio starts right now. hello, i'm rick horrow. welcome to sportfolio, bloomberg's inside look at sports. the 2014 winter olympics in sochi are just 10 weeks away. as always, a handful of athletes will come away with the games with more than just metals. they will become movers in the sports and entertainment marketplace. one who hopes to become a household name is speeds date or >> i fell into the putds before the trials and six inches of the blade into my
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thigh. i bounced off the boards, pull the blade out and i was sitting there looking at this meatloaf in my leg wondering what was going on. it turns out i cut myself all the way to my femur bone. if you can imagine being in top shape going to the trials, qualifying your spot and then being taken out. i leave it up to my support system to bring me back. my family was there for me and my friends and sponsors. >> 60 stitches. >> yeah. it was a shark bite, that's how i describe it. >> what did you learn from vancouver that you can apply to sochi? >> i was 19 going into vancouver . now that i have that experience i can really go into this game with a clear vision of what i am going there to accomplish. i can put all the years that have put into training and practicing onto the ice and
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hopefully win some gold medals. >> was a financial pressure of being in the sport you're in? >> is tremendous how much we train and how much we are not able to support for ourselves. companies like liberty mutual help and step in and help me there it they help me fund my goals and my james of being an olympian again. without that i wouldn't be able to do the sport at all. --n the olympics are on coming up, you have to reach out . if i do well in the coming months i will get my face on a box of wheaties. >> he grew up in seattle rooting for hometown hero apolo ohno.
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it is easy to understand apolo ohno's marketability, but this man jrcelski has an interesting background. >> he is a fantastic individual, he is 23 years old, but he is mature beyond his years. he spent his entire life not only fighting back from injury, 2009, 2009,ave heard before, in but since he was a kid he has been unbelievably dedicated. he is driven, he is a winner, he has interesting interests outside of it. he has done documentaries and music. he is kind of a guy that you would want your daughter to have a relationship with. a wonderful guy as is. >> he also can skate very quickly. his resilience and persistence
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-- obviously he is a renaissance guy. if he doesn't succeed or dominate in sochi you still marketable? >> he is a marvelous person regardless. you're completely right. his story translates regardless of what happens on the ice. he is an inspiration. >> so the sponsors he has that are committed to him our? >> he has a number of them. if you look at it, you will see they are trying to craft a family-friendly environment there it png, wheaties, smuckers, nike. we are in some financial and risk management, liberty mutual. really some interesting categories. >> sounds like you want to hug the guy and not just skate behind him. the challenge is to make him relevant for those two weeks. they're such an intertwined mesh of official sponsors, individual sponsorship opportunities and especially the russian government may or may not make it easier for you.
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how do you manage that challenge? >> we respect the usoc. we understand what they need to do to give them a value to the sponsors. when we are dealing with usoc sponsors and non-sponsors, for the non-sponsors it is really important to activate pre-the olympics. how do we reach his demographic with a storyline. ore we get into that dark. before the olympics. >> and then there is a dark. well after. that is a challenge at all olympic athletes face as you make him or her relevant during the olympics and how you perpetuate that relevance afterwards? you have these athletes that are there regularly, but how do you keep that man and others relevant for years and five years out? >> it is not easy and our folks brandon zweibel and peter raskin have done a fantastic job. to athletes we have been
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managing now dan jansen and goode blair, they were enough to provide advice and mentoring to jr to help explain how to maintain a career off the ice. >> there will be many medals awarded at sochi. titles got off to a roaring title last week with unforgettable upsets. coming up, we will talk with big ten commissioner jim delany about the college football playoff system. it will take effect next year. the cash will flow and so will the controversy. >> i hope the country holds together under this kind of pressure. ♪
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>> welcome back. five college football teams remain firmly in the mix to capture the championship with conference title games setting the stage for computers to determine the ultimate matchup. this is the last year for the current system. next season a committee will select for teams to compete for the ultimate prize. one of the primary architects of this new world order is big ten commissioner jim delany. he was a featured speaker at the sports symposium. i had the opportunity to sit down with the commissioner at harvard to discuss the development and structure of the college football playoffs. >> it is a template that is created with a successful
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basketball process. you have a few more teams and a few more dollars. it almost feels like the jury system. you lock them in a room. they figure out what they do and they come out. is that the brand is that the , process you want to create? >> i think the computers were widely criticized. i think data is really but itant. humans are more important. think i have confidence the group we have put together, the 13 individuals from a wide spectrum of life from coaching, to administration, to media, it is a team. they have all made big decisions under pressure. i think they will go in there
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and develop a culture. they will be as transparent as they can be. and then they will have to explain. think about the job the basketball committee does. we are not talking about -- i hope the country holds together under this kind of pressure. >> you think there will be some controversy? >> i think undoubtedly there will be controversy. you are going to have some success and controversy. i hope the success far outweighs the controversy. a certain amount of controversy is good, but when it overflows, it obscures what it is you are doing. you're trying to provide opportunities for more quality teams to >> how quickly -- compete for a championship. >> how quickly -- >> we stayed with the contracts that we had.
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i presume i do not expect any py that we will stay with the contracts here. i do not expect anychange over the next dozen years. >> we know from super bowl selection and final four selection, it is an economic engine for the communities that bid. are you comfortable with the process in place? >> we are. we had to get the game established and we did it. now there is a more broad and more robust process. we want to have traditional bowl sites involved. we want it to be a national thatt. it has to be distributed means nationally at some level. i think it is going to be a real hit and how successful is it ane really successful. the question is going to be? is it something we can manage? can we keep it in the right context. >> this regards revenue splits.
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is the tinkering and business allocation done? or is there some work yet to be done? >> it was a great process. fbs conferences got in the room, came up with a format, came up with a format to accommodate access and we also voted 12-0 on the revenue sharing. we proved that we could get in a room and resolve the issues and get on with the game. >> there are conference commissioners. it is akin to general motors and ford and others getting in a room and saying let's figure out how to deal with the auto industry. do you all get along? are you collaborative? are there common issues that you can automatically agree on and argue over the smaller ones? how'd you guys deal with each other? >> we are competitors. we compete with each other, but
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we all understand each other's challenges and problems. we have boards that we work with. we work with colorful athletic directors and coaches. we have been fortunate that we have a lot of resources. i would describe it as friendly competition. some of our relationships go back a quarter of a century. the five of us do work fairly collaboratively. there's a lot of respect there, but there is a lot of competition. we try to figure out a way to restructure the ncaa. we are trying to do it in a way that is a big umbrella, that allows for access and revenue sharing and championships. at the same time, we are under tremendous pressure to make sure the student athlete experience is a good one and an improved one and the system is not stuck in 1975. we have these resources. we want to get something that works for ourselves.
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it also has to be inclusive. >> jim delany is one of many leaders calling for fundamental change in the overall business structure of college sports. when we come back he will share , candid thoughts on how college athletics can better serve its many stakeholders. this week's stumper concerns college sports. in 2013, the university of michigan again led all college football in home attendance. what is the only school other than michigan to lead football attendance since 1975? the answer is straight ahead on "sportfolio." ♪
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>> other than michigan, the only university to lead the nation in attendance is the university of tennessee. the vols edged out the wolverines in 1997. the financial success of big- time football has put a strain on the traditional business model of college sports. there is no blueprint on how larger conferences should share revenues with their smaller neighbors. or to determine whether athletes are receiving appropriate
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benefits. ncaa regulations have presumed that one-size-fits-all, but the big ten commissioner does not necessarily agree. he sees complex problems that require systemic solutions. >> how does the whole college athlete getting paid issue get resolved? >> in principle, everyone that i know throughout college sports is against pay-for-play. everyone is in agreement that we need to structure the ncaa to give us the latitude of flexibility to address certain problems. how do we make sure the student gets the cost of education? how do we address time demands? i believe that is one of the
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areas that has changed the most, the extent to which athletes are tied up in athletic preparation. we need to make sure students are not exploited. how do we address that? how do we address lifetime educational benefits? so, if we do get the right political restructuring that would allow us to address it, if we do not do that, that is on us. the third leg on the stool is that we shouldn't be the sole exclusive route to professional sports. there are other opportunities. i was sorry to see nfl europe go away. everybody can bring a lawsuit, that was an opportunity. everybody can bring a lawsuit, that is the american way. we can defend it. the courts decide what they decide. there is while you are in the ia process for that, but system, you ought to know what the rules are when you come
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in. we have work to do in that area. we have work to do in that area. i think i like for 18- and 19- year-old young people to have a choice. if they want to be here, that's great we ought to do we can tog. make it the best educational and athletic experience that we can. if we don't, i want them to have it choice. the agents oftentimes view these kids as future clients. maybe they can provide the support to train them. that is what a lot of them want. if they want to be in college, that is terrific. if they don't want to be in college there should be a choice for them. >> what is the biggest change you would like to effectuate? >> i would like to see us take real steps in the political restructuring of the ncaa to allow us to use our resources in the 21st century on behalf of the student athlete up to
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and including the cost of education. i would like for us to be successful in pressing it successfully. there is a lot to be said about the college experience. my father experienced it, i experienced it. my son to some extent experienced it. arne duncan has said the college secretary of educationarne duncan has said the college athletics probably does as much to shape and build certain kinds of very positive experiences as any other organization. >> the ncaa board of directors will meet in 2014 and review governance issues. while no immediate action is jim delany's critiques will be expected, heard and could shape the future of this multibillion dollar industry. still plenty left on "sportfolio."
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find out why it is good to be the kings. >> we want to be a winning franchise. that should enhance the lives of those it touches and make the world a better place. >> get "sportfolio" wherever you go. ♪
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>> next week, he has completely revitalized the nba franchise and he is not satisfied. hear about his plans for a brand-new arena in san francisco. next week on sportfolio. in the spring of 2013, most nba analysts thought the sacramento kings were playing out the spring. a deal was in place to sell the team and move it to seattle. but kevin johnson led the effort to find investors to match the offer. "bloomberg west" anchor cory johnson shows us how a team of tech moguls has the king supposed to achieve great things.
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>> i think of it as a social network. >> he is hoping it will turn around a moribund franchise. >> these are truly smart people. >> people like paul jacobs and chris kelly. >> we might not have the most wins, but we have the most patents. >> chris mullin is his personal advisor. >> you have to have a lot of money to buy them. a lot of these guys are successful. they have money and they have passion. >> the kings pose a tough business problem. last season's attendance was the lowest in the league.
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averaging fewer than 14,008 night. one of the biggest tech titans of all tried to swoop in and buy the kings and move the team to seattle. >> i came to california with no money. everything i have i/o to the state of california. >> they make analytic software to help companies like delta airlines understand their data. >> i created a mission, you want to build a winning franchise and make the world a better place. just what i do for my software business, integrity, hard work, openness. >> that'll do it for this edition of "sportfolio."
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thank you for watching. for more video and sports business coverage, visit our website, bloomberg.com. i'm rick horrow, great to be with you. see you next time on "sportfolio." ♪
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>> the man who overcame the crushing racial divide reaches the end of the journey which took him from prison to the presidency. it might be the best sense 2005. >> we talk bailout exit plan and what is next for the emerald isle. hello, welcome to "countdown